Energy: The crisis has only just begun
U.S. recovery will tax gas and oil production, analysts say
marketwatch.com
By Martin Cej & Lisa Sanders, CBS.MarketWatch.com
Last Update: 7:45 PM ET July 13, 2001
SAN FRANCISCO (CBS.MW) -- If the U.S. energy crisis is over, someone failed to inform the people who ought to know best. From Houston to Calgary to London, oil and gas chief executives are busier than they've been in decades
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Indeed, if consumers and investors took a closer look at the petroleum industry these days, they wouldn't see a shamed bunch bracing for the end of the most recent energy boom-and-bust cycle. Instead, they would espy a throng of exploration and production companies behaving like marathoners, jostling and elbowing for position ahead of a long and profitable race. "Technically, the energy crunch has not even begun," said Christopher Ellinghaus, a principal at New York-based investment bank Williams Capital Group. Ellinghaus and others argue that a relatively mild North American summer, compounded by a slowing economy and falling commodity prices, have created a false all-clear perception about the supply-and-demand disparity that drove gas prices to record highs, prompted rolling blackouts in some states and sent one California utility into bankruptcy this winter. See related story on power companies
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Consumers and politicians point to a multitude of new power generation facilities going into development in the next two or three years that appear sufficient to meet the growing energy needs of the world's largest economy. Yet with gas supply unlikely to expand quickly enough to fuel those plants, Americans may be facing years -- not just few quarters -- of occasional blackouts.
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So, if the nation's economy can right itself in the final quarter of this year and hits its stride midway through 2002, as most economists expect, U.S. consumers will likely find themselves facing price hikes and blackouts similar to those suffered through the winter. "If the economy is going to get better, we'll be back to the shortage problem again," said Bill Church, portfolio manager of the SG Cowen Small-Cap group. |
